I understand you "shouldn't" effectively make any profit from the Flat Rate VAT scheme, but of course there is a possibility of a difference. I currently account traditionally for the VAT, and manually calculate the flat rate VAT. I did this to keep an eye to make sure we are not making any huge loss. However, we are now on month 5 and its currently looks like there is a profit vs if we had claimed VAT in the traditional method.
How should we reflect this in the account/tax return at the end of the year (partnership), could I produce accounts net of VAT and include some form on income from the difference in VAT paid to VAT due?
Also, how do you account in the tax return for pre-reg VAT claims ie from previous years where the tax return has claimed expenses/capital as gross of VAT?
it becomes taxable income (#1) the same as if were earned income so you still make a profit but not as much prfit as you thought as there will still be corporation tax to pay on it.
HTH,
Shaun.
#1 just subsume within other taxable income, no need to state seperately.
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Shaun
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